I will take a moment to say how glad I am to serve once again under your chairmanship from the Back Benches, Mr Walker.

It is right that everyone, both individuals and corporations, should pay the correct amount of tax, and I welcome the Government’s commitment to a fairer tax system. I was pleased to see that the UK’s tax gap has fallen to a record low of 5.7% in recent months.

I should start by explaining what the loan charge is. The gov.uk website explains:

The loan charge was announced at the 2016 Budget. The policy ensures that users of tax avoidance loan schemes pay their share of tax and is expected to protect £3.2 billion for the UK’s vital public services. The website also says:

“The loan charge works by adding together all outstanding loans and taxing them as income in one year.”

Therein lies the difficulty and the fundamental cause of the impact on individuals and families.

“Certainty and transparency are the hallmarks of a fair, effective and competitive tax system. A taxpayer is entitled to know with certainty…what he may or may not do in planning his tax affairs.”—[Official Report, 7 June 2005; Vol. 434, c. 1139.]

That is why I object to retrospective legislation that undermines the rule of law.

The introduction of the 2019 loan charge has been beset by challenges, confusion and complications. Over 100 MPs have signed early day motion 1239 calling on the Government to significantly revise this piece of legislation. I am glad we are meeting today in this well-attended debate to consider the impact of the loan charge.

In the 2016 Budget, the Government announced that they would introduce legislation to tackle disguised remuneration schemes. Statutory provision was included in the Finance (No. 2) Act 2017, with further provisions included in the Finance Bill introduced after the autumn Budget last November, now the Finance Act 2018. The Government say they will protect £3.2 billion by taking action to tackle both historic and continued use of these schemes. That is a not inconsiderable sum. It will include a new charge on loans paid through disguised remuneration schemes that have not been taxed and are still outstanding on 5 April 2019.

Her Majesty’s Revenue and Customs states that the schemes affected by the 2019 loan charge were not and never have been legal. However, that is disputed by the Loan Charge Action Group. I refer to a letter by the Chancellor of the 19th of this month, published today on the Treasury Committee website. The Chancellor writes:

“Finally, I would like to clarify my comments to the Committee in reference to the use of disguised remuneration (DR) schemes which I described as ‘tax evasion’. I should have said ‘tax avoidance,’ and that in the Government’s view, tax was always due.”

That is a very important distinction, because evasion is illegal, while avoidance is an undesirable and unintended use of Parliament’s legislation. In drawing that distinction and correcting the record to say “avoidance”, the Chancellor has made an important concession.

My hon. Friend is making an interesting speech, and I congratulate him on securing this important debate. As a former personal finance editor before entering this place, I used to have many inquiries from readers about these schemes as they were offered to them. My advice was always, “Steer clear, because eventually the price will be paid.” Does he agree that there is a role for regulators to look at the poor and potentially dangerous advice given by accountants about these schemes?

It is my intention in my concluding remarks to stridently condemn the promoters of these schemes, who have ended up luring people into misery through what they have done.

Before closing with this letter, I want to mention that the Chancellor also wrote:

“It is not normal, or indeed reasonable, to be paid in loans that are not repaid in practice. It is not fair to the vast majority of taxpayers who pay their taxes in full and on time for anyone to benefit from contrived avoidance of this sort and that is why this government has legislated the charge on DR loans.”

I agree with the Chancellor that it is not normal or reasonable, but I make it very clear that I place the blame on the promoters of these schemes.

HMRC initially expected 40,000 people to be affected, although in a recent parliamentary question, my right hon. Friend the Financial Secretary to the Treasury gave a new figure of 50,000. HMRC’s impact note stated:

“The government anticipates that some of these individuals will become insolvent as a result.”

The Loan Charge Action Group suggests that the loan charge will end up affecting probably upwards of 100,000 people and their families.

“retrospectively taxing something that was technically allowed at the time, is unfair”.

Of course, I would agree. HMRC has argued that the loan charge is a new tax on a new source, and described it as retroactive rather than retrospective. I would like the Minister, if he can, to explain both terms and any difference that the Treasury is implying.

The hon. Gentleman deserves a lot of credit for bringing this issue to the House. Does he agree that we should be working cross-party ahead of the Report stage of this year’s Finance Bill to put together a new clause that deals with the problem, under which any loan charge would come into effect only after Royal Assent of the Finance (No. 2) Act 2017?

I certainly agree with the right hon. Gentleman that there is a job of work to be done across parties to uphold the rule of law, in particular the principle that legislation should not apply retrospectively. That is a subject on which I have made speeches over the years. We end up in a hideous cycle of undesired action, in particular to avoid taxation, followed by the injustice of retrospective action to protect other taxpayers and the misery that causes to large numbers of people. It must be brought to an end, but underpinning that we must be committed to the rule of law.

I am grateful to my hon. Friend for bringing this debate to the Chamber. Can I ask him about retrospection? My constituent, Alan Williams FCA, points out that HMRC already had sufficient power to recover tax from individuals, so it is rather its own convenience and its unwillingness to apply its existing powers that have led to this legislation. My constituent Andy Pocock points out that in his case, he has procedures under the existing legislation whereby he is allowed to appeal, but all that will be cut off retrospectively by the new legislation and he will not have a chance to fight and defend his corner.

One of Parliament’s duties is to restrain the Executive and ensure that their powers are reasonable. We should look carefully at the subject that my right hon. Friend has just raised. It is important that HMRC treats people in a decent and civilised way, and certainly more powers ought not to be taken than are strictly necessary.

My hon. Friend is to be congratulated on securing a debate on this subject. One of the iniquities, in addition to the issue of retrospectivity, is that at least four of the constituents who have been to see me have said that they were told by their companies that unless they signed these new forms of contractual relationships, they would not continue to work for those companies. Given that, should not HMRC be pursuing the companies and not the individuals?

I entirely agree with my hon. Friend. Toward the end of my remarks I will come on to the solutions that I propose, but I entirely agree with him that if any company insisted on people engaging in these arrangements it certainly should share the responsibility for what they did.

The hon. Gentleman is being very generous with his time and I thank him for securing this debate. On that last point, my constituent was a civil servant for 37 years. In 2010, his team was TUPE-ed from the Ministry of Defence to Hewlett Packard. He retired in 2013. In 2014, they asked him back to oversee a Ministry of Defence contract, but refused to take him back on pay-as-you-earn and said they would only do it through one of these vehicles. Should my constituent not have had some comfort from the fact that this was an MOD contract? Surely the Government and Government Departments should look at who they are contracting with, to ensure that a man such as this, in his retirement years, is not stung by this charge?

I obviously cannot comment on individual circumstances. However, this is a good opportunity to draw a distinction between taking people on as contractors and insisting that they join schemes that could end up with their using disguised remuneration arrangements. On the one hand, contracting is a legitimate way of going about business; on the other, engaging in disguised remuneration schemes—an aggressive form of tax avoidance—is not desirable.

My hon. Friend is doing a sterling job of raising this matter in this place. On that basis, will he challenge the Minister on how many firms have been investigated, how many promoters have been pursued and prosecuted, and how many of those had some connection to Government contracts or payments?

I join my right hon. Friend’s call for the Minister to set that out, which my hon. Friend the Minister will have heard. I will now make some progress.

The Loan Charge Action Group says that the human impact of receiving a bill for up to 10 years’ worth of tax will have a catastrophic effect on individuals and their families. On whom among us would it not have a catastrophic effect? It goes on to say that we are looking at thousands of bankruptcies, family break-ups and suicide attempts, as well as mental illness, unemployment, loss of abode and more. That is a catalogue of human suffering and misery.

“This package is not expected to have a material impact on family formation, stability or breakdown.”

However, that looks at aggregates, not the impact on individuals, which it seems to me is a common mistake of Government. As a Conservative, I wish to focus first and foremost on the individual, not the collective.

I will foreshorten my remarks, given the interventions I have taken. One specific complaint is the lack of warning. A freedom of information request revealed that HMRC has issued about 23,000 loan charge awareness letters, which were only issued from the second quarter of 2018. HMRC says that 50,000 individuals may be affected, so many will be unaware of the impending charge. The Loan Charge Action Group points out that the opportunities to settle new tax affairs with HMRC ahead of the charge were similarly not widely publicised, nor was the deadline of 31 May 2018, leaving people in a terrible fix, although I understand that the deadline has been quietly dropped.

The Loan Charge Action Group suggests that historical users of schemes who left many years ago are probably completely ignorant of this new legislation and will only hear of it after receiving a large bill some time in 2020. This is a dreadful risk that the Government should forestall.

I am keen to conclude, so I will come to some solutions that I ask the Minister to consider. As I outlined in a letter to the Chancellor in September, there should be clarity about what DOTAS—disclosure of tax avoidance schemes—registration means. There should be a legally mandated text accompanying every advertisement of a DOTAS-registered scheme that explains that the purpose of registration is to enable HMRC to identify tax liabilities and to recover them when such schemes are proven not to work. It does not imply any kind of legitimacy, and registration with HMRC is not for the purpose of endorsing the schemes. When HMRC becomes aware that a taxpayer has subscribed to a DOTAS-registered scheme, it should contact the taxpayer and make them aware that registration has the purpose of enforcement and does not convey legitimacy. HMRC must take into account people’s circumstances, and the threat of insolvency should never be used as a kind of extrajudicial punishment.

On treating individuals fairly, it is pretty evident that the people who have been selling these questionable products are not being pursued in the way that they should be. In view of that, does my hon. Friend agree that the Government should start looking at mitigation, so that certain individuals—I know of a couple in my constituency—are not bankrupted by this whole sorry affair?

The loan charge should apply from Royal Assent onwards. In other words, it should be prospective—a case I have made many times—not retroactive or retrospective. HMRC should be more proactive in advising that such schemes are likely to end in tax charges in the future, and perhaps far into the future. More steps should be taken against promoters and introducers of such schemes. They are the ones profiting from this misery. Finally, the issue of employment status and IR35 requires action at last, to bring the uncertainty to an end.

My hon. Friend wants further action taken against the promoters of these schemes. Does he agree that we also need to take action against the Queen’s counsel who peddled rinky-dink advice that encouraged many of our constituents—including some of mine—to participate in these schemes, in the belief that a QC’s opinion rendered them beyond the reach of HMRC?

My hon. Friend makes a very good point. I hesitate to trespass far beyond my expertise, but I make the point that it is often thought that the opinion of a QC determines the truth. That is not the case. QCs and barristers argue among themselves in court, and the court determines the facts. I am often struck by people relying on the opinions of lawyers when what they actually need is the judgment of a court.

On the judgment of courts, does my hon. Friend share my concern that individuals are sometimes effectively left without a remedy, because the person who gave them that advice so many years ago no longer continues to trade? There is then effectively no remedy for the individual and no ability for them to claw back their significant losses.

My hon. Friend raises an important point. In concluding my remarks, I shall allow what he says to stand.

I really think that it is perfectly natural for people to want to pay less tax, but I would be failing in my duty if I did not say to all those paying attention to the debate that, when something seems too good to be true, it probably is. We ought not ever to allow ourselves to be lured into schemes that offer absurdly low rates of tax. However, I save my strident condemnation for the promoters of these schemes, who, in their advertisements, seek to persuade people that this is legitimate activity and to create the impression that DOTAS registration conveys some kind of legitimacy or endorsement by the state. That is an outrage, because of course it encourages people to participate. These promoters are, frankly, wicked. It is a great evil to encourage people into these schemes and to leave them in misery afterwards.

Finally, we must insist on the rule of law. Notwithstanding the wicked conduct of promoters, the greater wickedness in the end is to undermine the rule of law—the certainty that comes from someone knowing that, if their actions were lawful at the time they were carried out, they will not subsequently be challenged through retrospective legislation. I feel most strongly about that, as I have throughout my time in Parliament. I urge the Government, whatever evils have been done by the promoters of these schemes, to abandon the practice of retrospective legislation.

A number of colleagues wish to speak. If colleagues can restrict themselves to speaking for no more than five minutes each, I will not put a timer on. However, if colleagues go over five minutes, I will have to start reducing other colleagues’ time.

On behalf of all Members here, I congratulate the Loan Charge Action Group on its effective lobbying of so many MPs. I would not wish its members to think that this number of MPs normally turn up to such a debate. It has done very well and has clearly done its members proud.

I start by emphasising that I cannot defend tax avoidance in any form. I strongly believe that everyone should pay their fair share and that there should be repercussions for those who do not. However, the case at hand is not quite so simple. This loan charge will affect up to 100,000 people, many of whom acted in good faith and were acutely unaware that they were ever doing anything wrong. Several of those impacted were forced into schemes as prerequisites of taking up a job, following guidance given in good faith rather than attempting to avoid their tax responsibility. They are being taxed retrospectively for something that was technically allowed at the time.

What is more, the proposed 20-year range is usually reserved for blatant acts of criminality. We are talking about life-changing amounts of money. For some people, the sums involved run into hundreds of thousands of pounds. This will lead to bankruptcy. This will lead to mental breakdown. This will lead, and has led, to suicide. I will quote directly from the letters and emails sent to me by my constituents, so that the Minister can hear the reality behind these excessive measures.

Mr M describes a dark cloud hanging over his head. He says:

“It has been hell and I have at times considered suicide. It will affect my kids’ entire lives, in that I will be unable to support them as they grow older and I may be unable to buy a property for the rest of my life.”

Mr M argues that governing with life-changing force and 20 years in the past is nothing short of grossly unfair and that it sets a dangerous precedent that HMRC can, where it suits its need, change or create laws and retroactively and aggressively enforce them.

Mr C says that bankruptcy is his only option. He says that he took and followed professional advice and declared his arrangements at the time to HMRC, which did not act. Mr L describes the impact of the stress levels on his health since he was made aware of the legislation, particularly as he believed the scheme to be legitimate. He claims that these schemes are still freely available for contractors to sign up to.

My constituents are not alone. The Loan Charge Action Group has conducted analysis of those affected. It highlights the fact that 68% describe depression, 71% fear bankruptcy, 31% fear relationship breakdown and 39% have suicidal thoughts. The policy will cost lives.

Would it not be more sensible for HMRC to pursue the enablers of the schemes? I am talking about the client organisations, agencies and umbrella companies, all of which have benefited and which, I believe, hold the most responsibility. Perhaps HMRC does not do that because even HMRC itself was using and paying contracts now subject to the loan charge, working through arrangements that HMRC now declares to be tax avoidance schemes.

Let me re-emphasise that if and when an individual or organisation has purposely dodged tax, they must be penalised. But what strikes me is that HMRC is ruthlessly pursuing hard-working contractors, while rolling over in the face of obvious and aggressive tax avoidance by so many of the UK’s largest corporations. Why did Amazon pay just £1.7 million in taxes last year, despite profits almost trebling to £72.3 million? Why did Facebook pay just £15.8 million in taxes last year, despite collecting a record £1.3 billion in British sales? Why did Google pay just £49 million on UK sales of £7.6 billion? Richard Murphy, a professor of practice in international political economy, estimates that such tax avoidance costs the UK about £7 billion each year. That is enough to pay for 180,000 nurses or 150,000 secondary school teachers.

Tax avoidance in any form must not be tolerated. While the Government bankrupt unknowing individuals across the country, multibillion-pound corporations make a laughing stock of their tax collection efforts. It is high time that those organisations and those who have enabled the schemes described today were made to pay their fair share once and for all.

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend Mr Baker on securing this debate, which gives us the opportunity to highlight the devastating impact that the 2019 loan charge is having on many individuals.

My constituent who has been affected by the loan charge is at his wits’ end. His family life has been turned upside down and, as he sees it, he has no alternative but to declare himself bankrupt. He is not a wealthy man. He is not a professional footballer, he is an IT contractor. When he and others were made redundant by BT, they were introduced to financial advisers who set up these schemes for them. He and they acted in good faith, only following the advice given so as to be IR35 compliant.

I want to highlight two issues. My first concern is that HMRC is pursuing the easy targets—individuals who have acted in good faith, are not well off and do not have their own bespoke financial advisers and accountants. My understanding is that the Glasgow Rangers Football Club case, on which the 2019 loan charge is based, concluded that the tax liability fell on the employers. That raises the question why HMRC is not pursuing the client organisations, agencies and umbrella groups that have benefited significantly from setting up these arrangements.

I agree with my hon. Friend’s focus on the individuals involved. Does he agree that the retrospective nature of the measure is not just a matter for the rule of law in the abstract, but that it undermines the trust of those people and their families and communities in our Government and our legal system, and will do so for generations to come?

I thank my hon. Friend for his intervention—he has a crystal ball, because he has foretold the next item in my speech.

The people affected have become a target. They are vulnerable people. They are not well paid and do not receive many of the benefits and protections that payroll employees do: sick pay, holiday pay and maternity and paternity leave. I would be grateful if my hon. Friend the Minister could advise us when he sums up the debate of whether the impact assessment has looked at the personal circumstances of the individuals who are being pursued, whether they are able to pay and what the impact will be on their lives.

My second point, which my hon. Friend Bim Afolami foretold, is that the basis on which the 2019 loan charge has been introduced and many individuals are now being pursued is that it is retrospective. It undermines the cornerstone of taxation, which is that a Government should not seek to impose or increase a tax charge on income earned, gains realised or transactions concluded at a time before the legislation was announced.

I thank my hon. Friend for giving way and you, Mr Walker, for intervening in such a magnanimous way.

It is not just right hon. and hon. Members in this Chamber who take the view that my hon. Friend has just expressed in relation to retrospective taxation. The current Chancellor of the Exchequer said in 2005:

I thank my hon. Friend for that intervention: he reinforces what is the fundamental, fatal flaw of this injustice. What I and, I believe, all hon. Members in the Chamber are concerned about is that a group of people—often vulnerable people—who have acted in good faith are now being asked to bear an excessive burden, which will have a devastating impact on their lives and their families’ lives. For that reason, it is very important that we air these concerns to the Minister.

It is a pleasure to see you in the Chair, Mr Walker. I am delighted to follow Peter Aldous. I offer my congratulations to Mr Baker on setting up this important debate. I, too, am grateful to the Loan Charge Action Group for its briefing and, in particular, to our former colleague in the House, Greg Mulholland, for his assistance in preparing for the debate.

A number of constituents have contacted me about this issue, and I will focus on the questions that they wish me to put to the Minister at the end of my remarks. I will make a few comments beforehand, though, first on the numbers of people affected, which seem to be in dispute. There has already been mention of several figures: 40,000, 50,000 and 100,000. If I read the Library briefing correctly, Mr David Richardson, director of customer strategy at HMRC, said to the Treasury Committee that there were 105,000 cases, 80,000 of which were unresolved. I would be grateful if the Minister could clarify exactly what the numbers are.

The second issue is the jobs that some of the victims have. The Loan Charge Action Group says:

“The Loan Charge affects many tens of thousands of professionals—contractors, freelancers, agency workers including social workers, supply teachers, locum nurses and doctors who were recommended to use umbrella companies by employers, professional advisers and employment agencies.

For many people the sums involved run into hundreds of thousands of pounds”.

The group goes on to say:

“Schemes were, and still are, legal and in most cases the motivation behind their use was not to reduce tax but simply to comply with the poorly drafted IR35 legislation, which”,

18 years on, “remains unclear.” It is misunderstood, and certainly the origin of this issue does seem to be the IR35 regulations. I have been dealing with cases for constituents about that for the past 18 years.

My hon. Friend Siobhain McDonagh made reference, as did the hon. Member for Wycombe, to the Loan Charge Action Group’s analysis of the impact. She quoted the figures about those who are affected. Some 68% were affected by depression or mental impact, 71% by bankruptcy, 49% by loss of resident home, 30% by divorce and relationship breakdown, 30% by loss of career, and 39% by suicide or self-harm thoughts. The biggest issue for all my constituents and the action group is the retrospective nature of the legislation, which the hon. Member for Wycombe focused on. That has been raised many times already, and the key question remains about the transparent unfairness of this decision.

My constituents have requested that I have put a number of questions to the Minister. I recognise that he is not directly responsible for this policy, but I am sure he has a briefing that will cover at least some of the questions that my constituents have asked me to raise, because they are quite predictable.

Why did it take HMRC 20 years to take official action? Why did HMRC not email or write to loan users over the past 20 years, to ask them to come out of these schemes and the associated risks, when it had the relevant information on the yearly individual self-assessment tax returns? Why ask for 20 years’ retrospective payment for something that was and is legal? Why has an appeal format been refused to loan scheme users, leaving costly judicial review as the only alternative, which single individuals cannot afford by themselves?

Why cannot HMRC just admit that it did not perform due diligence on the loan schemes? Why, when public sector contractors were asked to move into IR35 in 2018 so that they could pay the right amount of tax, did they not get retroactive tax to pay? Why did PricewaterhouseCoopers get away with 35% early discount on a £10 million fine in 2017 for a failed BHS audit? Apart from going bankrupt or committing suicide, how does HMRC expect most individuals to be able to repay such sums at short notice?

My hon. Friend the Member for Mitcham and Morden also mentioned a letter the action group received saying that HMRC contractors are now being pursued by HMRC due to the loan charge. The Loan Charge Action Group has now discovered that HMRC itself was using and paying contractors who are now subject to the loan charge. The LCAG has been contacted by people in that situation reporting that they are working on important IT projects for HMRC, were security-cleared by HMRC, and were working through arrangements that HMRC has now declared to be tax avoidance schemes. In effect, that means that HMRC was itself involved in arrangements that it now says “never worked.” The action group commented:

“This turns this from fiasco into farce.”

Perhaps the Minister could comment on that.

More than 100 colleagues have signed the early-day motion. This is clearly an issue that the Government have to address. There is a massive impact on the lives of those affected, including my constituents. They look to HMRC for fairness, and I trust that the Minister’s response will indicate that that is a possibility. If it is not, I look forward to a cross-party, Back-Bench new clause to the Finance Bill, which, based on the numbers here today, would stand a good chance of passing through the House.

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend Mr Baker on introducing the debate and being such a champion on this issue. My inbox and my surgeries have been inundated.

I represent Aberdeen South, which is the energy capital of Europe and the hub of our oil and gas industry. Many who worked in oil and gas were actively encouraged by their companies to get involved with such schemes, to set up a personal limited company and to get off the company books. Many did so for many years. Many felt assured that they were being advised by chartered accountants and tax advisers. Everything was above board. It was their belief that their professional accountant could not advise anything illegal, otherwise their chartered status would be revoked.

My hon. Friend is absolutely right and I could not agree with him more. For many, this option seemed to be the obvious choice. The retrospective nature of this decision is causing great distress. As has been said, there is a huge human cost. I want to take this opportunity to share with the Minister and hon. Members the stories of my constituents.

One constituent wrote to me and said:

“It’s been going on for a few years now and taking its toll on my family. As we are unsure where we’ll get the money to pay any outstanding tax, their bullying tactics in getting you to sign up to pay and the fact they demand you to reach a settlement with them, even though when we have done everything they ask, they have still not come back with any settlement figures.

Not only that, they are saying even if you settle or pay back the loans, there’s a strong possibility it won’t end there, so we go back to their scaremongering tactics they’ve deployed for you to pay up front and ask questions later, it’s totally unjust for our future as being a democratic society”.

Another constituent said:

“I like to think I understood the risk I was taking and had every confidence in the scheme I was using, I did not entertain the prospect that the Government would be prepared to violate the core principle of the rule of ‘legal certainty’ by introducing retrospective legislation going back 20 years… This weekend I have received my settlement ‘offer’ underHMRC’s settlement offer and am currently in the process of deciding whether or not to accept their terms. Whilst I sincerely would like to settle and move on, I am deeply concerned that their CLSO2 is extremely unfair and punitive.”

My hon. Friend is making a powerful point. Does he agree that the fundamental unfairness is that HMRC is going after the easiest of targets, namely the individuals, rather than those who may be the most culpable?

I could not agree more. It seems to be easy pickings for HMRC. It is not going after those who are truly culpable. That is why such great distress is being expressed in our surgeries.

My constituent continued:

“This whole sorry affair has imposed life changing levels of stress on both me and my family, especially with the backdrop of the recent downturn in the oil and gas industry where I have been out of work for about 50% of the past two years.”

Another constituent wrote:

“This is a complicated situation, however fundamentally, HMRC have closed down the opportunity to use these ‘loan’ schemes.”

My constituent accepts that it is a positive move to end ambiguity.

“The retrospective nature of this legislation is going to place a large number of contractors under extreme financial duress. Bearing in mind HMRC’s failure to sort this situation out sooner”.

Another constituent—this is the last example I will give—emailed me to say that he was emailed by a company stating that he could retain 78% to 80% of his salary legally. He wrote:

“The scheme was QC approved and top tax counsel advised it was sound… I learnt during the latter part of last week that my retrospective tax charge is very likely to exceed £230,000. As for HMRC’s so-called ‘Impact Assessment’ apparently finding that such sums would lead to few, if any issues for those being expected to pay such, I can only comment that they must assume that we are all multi-millionaires. Of course, they know full well that we aren’t.

It’s very daunting when the full weight of government makes demands with threats of the law being brought to bear when, according to the law, no law has been broken. I doubt very much that I can simply ignore threats, be taken to court and stand there and say such. Thus individuals are placed in the position of hiring lawyers with costs running into six-figures and this will be beyond the means of most, if not all of us.”

This particular constituent says that he is single and has

“never had a second income from a partner to assist with cost of living”.

He is facing serious financial distress.

It is right that we condemn those who sold on and encouraged such schemes. It is deeply unfair that we seek to do this retrospectively. It absolutely violates the core principles of the rule of law. I could not agree more with colleagues who have already expressed that frustration. I think that this particular measure is disgraceful. I will go further, I think it is dishonourable and should be stopped.

This House has the chance and the opportunity to put this wrong right. As Jim Fitzpatrick said at the end of his speech, there will be a Report stage to the current Finance Bill. It will come to the Floor of the House and we—every Member here today of whatever party, whoever signed the early-day motion—have the power to come together, cross-party, and pass a new clause to right this wrong. Frankly, words in a Westminster Hall debate and signatures on an EDM mean nothing unless we are prepared to go through the Lobby to vote this tyrannous legislation down. Constituents, the Loan Charge Action Group and all the people affected will expect their Members of Parliament to vote and act and not simply talk. Today gives us a platform to make sure we send a powerful message to Treasury Ministers that this is a catalyst for the action that was not taken two years ago, but will be taken, I believe, when we get to the Report stage of the Finance Bill.

As has been said by Mr Baker, there is a fundamental principle here that he and I can agree on: the rule of law. When we talk about British values, about which he and I agree, the rule of law is something the Department for Education says should be taught in every school up and down our country. Well, this is the test. Either Members of Parliament believe in the rule of law and what our children are taught, or they do not. When we vote on the new clause in the Finance Bill, as I am sure we will be asked to, we will see whether we really do believe in the rule of law.

As one liberal to another, it is a delight to agree with the right hon. Gentleman. I hope members of the public will not think I am engaging in too much levity if I say that some of us are engaged in enough rebellion already. I should be very grateful indeed if the Government tabled their own amendment to deal with this matter so that we do not find ourselves engaged in any sort of rebellion on the Finance Bill.

It was a pleasure to allow that intervention. I have no objection to the way in which the wrong is righted, as long as it is righted properly. If we stick to the principle of the rule of law, as I said in my intervention on the hon. Gentleman, ending retrospection in this tax change means that any charge prior to Royal Assent of the Finance (No. 2) Act 2017 must end. There can be no charges before Royal Assent of that Act, otherwise we are in the area of retrospection.

Like other colleagues, I have had constituents contacting me. Sixteen have contacted me directly, and in my experience that means there are many more out there who have not contacted me. I will read from just one, from Mr Garry Taylor, who talks about the “devastating consequences” that will destroy the finances of “me and my family”. I do not know about other colleagues, but I have had people almost in tears in my surgery over a tax matter, which has never happened before in 20 years.

I could not agree more. I have never seen people so distressed and distraught by one particular measure, which appears to target pain on just a few people. Those people work hard in our NHS, our industry, our schools and our civil service. Why do the Government want to target so much pain on so relatively few people? The charges involved are massive: hundreds of thousands of pounds. It is completely iniquitous. I believe the Minister knows that and I hope he will therefore put it right. Everyone in this House is clearly against tax scams. We want to close them down, but as other hon. and right hon. Gentlemen have said, people were advised by professional accountants and HMRC appeared to be happy. It was notified of the tax schemes and did nothing. Yes, let us crack down on tax avoidance, but let us not go after victims, the people simply trying to earn a living for them and their families.

I might be the only veteran of the 1999 Finance BillStanding Committee. I am happy for colleagues to correct me, but in those early days of my parliamentary career, I had the pleasure of sitting on nine consecutive Finance Bills that dealt with the early history of IR35. We had huge arguments then that that was wrong. There is an inherent issue that needs to be tackled, but what is proposed is absolutely not the way. HMRC has got to learn from history. It appears to me to be acting vindictively because it did not get its way a few years ago on IR35. Because people found legitimate ways around it, it is coming back and acting in an outrageously draconian way, and this House has to say no.

It is a pleasure to serve under your chairmanship, Mr Walker. I must begin with a little grovelling and apologise in advance for having to leave this debate for a statutory instrument Committee. I am grateful to you for allowing me to speak, and to my hon. Friend Mr Baker, who secured this debate. It is of great importance not only to my constituents, but to those of many other hon. Members.

My constituents are concerned about the 2019 loan charge. They have tended to work as contractors or freelancers in the IT and professional services sphere, and they are now deeply concerned that HMRC’s actions over the loan charge will place them in serious financial hardship, if not outright bankruptcy. They suggest to me that they were encouraged by professional advisers or the contracting companies themselves to enter special payment schemes, which were deemed legal and allowed for scheme users to be paid in the form of a loan rather than ordinary remuneration. Resulting from poorly drafted IR35 legislation, such schemes are now deemed by HMRC to be disguised remuneration that amounts to aggressive tax avoidance. HMRC is pursuing affected constituents at a time when many are cannot easily recover their earnings.

My constituents fear that this action represents retrospective taxation, thereby undermining legal certainty and confidence in the tax system. They are also angry that the charge is being levied on contracting employees, despite a legal case involving Rangers, which judged the employer liable for any unpaid tax and national insurance. Given that for nearly two decades HMRC appeared to permit tax advisers and accountants to recommend the schemes without penalty, my constituents believe they have been let down by a system that should have alerted them to problems in a timely manner.

I have had a one-to-one meeting with the Financial Secretary on this issue in which he set out the Government’s position with clarity. I understand that scheme users will now be able to spread any payments to HMRC over five years should their taxable income this year be under £50,000. However, my constituents want to know why HMRC is not apparently being more robust in pursuing the tax advisers, accountants and contracting companies who took freelancers and contractors down this route in the first place.

One constituent told me:

“I decided to contract having been made redundant 3 times from what I considered safe and stable jobs. I have never in my life taken any state benefit. The only and main reason I signed up to a..scheme was because I felt that after a year as a self-employed person...the rewards did not justify the risks and with IR35...insisted upon by my employers”,

it seemed

“the only route open for me to improve my take home pay”.

He goes on:

“I am not justifying any shortfall in the tax...that I maybe should or could have paid, but Government and HMRC” allowed

“schemes to flourish for years without redress...HMRC have chosen to inflict regular PAYE/NI rates, apply penalties and interest for open years and take no account of holidays, sickness benefits, pensions, training and out of contract time that freelancers have to finance themselves. Surely, even a concession on the rate being charged under the Loan Charge would be a fair and reasonable compromise?”

I must confess that without having access to the precise details of individual tax paid and the specifics of the schemes entered into, I have found myself caught between the concerns of constituents and the assurances of Ministers, who believe very strongly that the loan schemes clearly represented an illegitimate attempt to avoid tax. I fear, therefore, that the fairness and legality of HMRC’s actions will end up being determined in the courts by those with the tax expertise to look dispassionately at these matters. None the less, I wanted to raise these concerns in this afternoon’s debate in my role as a constituency MP, and I would be grateful if the Minister addressed the specific concerns that my residents have raised with me: namely, the apparent lack of action against culpable financial and legal advisers and employers, the calculation of tax owed, and retrospection in the tax system, which risks undermining wider confidence in the system.

In 2000, the Government introduced legislation called IR35, which sought to class many freelancers as employees. It was designed to target “disguised employment” and the Government wanted to close a loophole that allowed companies to employ people without collecting NICs or paying other associated taxes. Unfortunately, “disguised employment” was not well defined. When people were engaged on very different terms to permanent employees, it was not clear whether they were subject to IR35. In that grey area, third-party scheme providers began to offer a service whereby contractors became employees of a third-party company, which was then engaged by the agency or client company. Remuneration was paid in the form of loans, which were often made by an offshore third party.

Those arrangements were marketed as HMRC-compliant and seemed to offer the certainty that many were looking for. The Government now claim that the arrangements did not work and, although they were within the law, were not in tune with what Parliament intended. That has led to a series of measures designed to recover the funds, which were not originally deemed taxable, in spite of the fact that the people affected legitimately completed tax returns, paid their dues and disclosed the arrangements to HMRC.

Many within the schemes have yet to be informed of the amount that they are due to pay, including my constituent Nick, who was involved in one of them. To say that Nick is worried about that is an understatement. I have met him, and he said that he is

“facing personal ruin, most likely bankruptcy with the loss of the family home”.

He feels that that will affect him and his family. He continued:

“While I have recently moved out of financial services…bankruptcy would make me ineligible to work for any financial services company again therefore severely limiting my potential employers” and employment. To say that causes a great deal of stress is an understatement. Although he is grateful to have the support of his wife and family, there are days when he feels hopelessly overwhelmed by that looming over him.

Given the vast sums of money involved, and the various reasons and backgrounds behind people becoming involved in such schemes, we need a sense of the role of the companies who provided the contracts. They clearly played a role. I would also like to know from the Minister whether the time-to-pay arrangements will provide the people affected with any kind of practical support.

Jim Fitzpatrick made it clear that the genesis of the matter was the change to IR35 in 2000, which led to many freelance, contracted and itinerant workers ordering their financial affairs, notably for the purpose of paying tax, in a way that they believed and were told was completely proper and in line with the new regulatory environment. Subsequently, umbrella schemes developed as some of those people’s tax and financial affairs led them to the point where they became liable for employer’s national insurance contributions. Those umbrella schemes have become mainstream in the subsequent 18 years.

The people concerned were largely acting in good faith, whether or not the people who were advising and promoting the schemes were. The architects and advocates of the schemes are the people who the Treasury should be pursuing with vigour and determination.

Is my right hon. Friend aware that many of the organisations and advisers that encouraged our constituents, who are now suffering so much grief, to go into the schemes are the self-same ones putting themselves forward to give our constituents advice to address the challenges from HMRC? Does that not add insult to injury?

That should be a further part of the invitation that I made via my hon. Friend Mr Baker, whom I congratulate on securing the debate, to the Minister. We look forward to the Minister confirming that when he responds.

I am grateful, because I concur entirely with the point that the real villains are the companies that mis-sold the schemes in the first place—at times, for fees that can only be considered usurious. My constituent paid £138,000 in fees over three years to a company called AM Limited, which has changed its name but is still trading and registered in Panama. If HMRC were to assist my constituent in trying to recover that money, he would be much better able to pay his retrospective tax liability.

I have answered many debates in this Chamber as a Minister of various Departments, and I tell the Minister, who is a good and honourable man, that when this many hon. Members from both sides of the House come together in a single cause, he had better take action. The writing is on the wall and he has to respond. I know he will take that piece of sound advice in the spirit that it is offered to him.

I will briefly make three recommendations and then draw my remarks to a rapid conclusion. First, I would like the Minister to tell us what further impact assessment has been made by scale and detail on the families affected by the measures. Secondly, I would like him to give us an estimate of how many people who cannot or will not pay will be driven to bankruptcy, and what effect that will have on the Treasury’s revenue calculations on the matter. Thirdly, as I have already said twice—I make no apology for amplifying it—I would like him to tell us what steps he is taking in respect of the architects and advocates of the schemes, who have done so much damage.

I have no doubt that being a Treasury Minister is about churning figures, but it is also about changing lives. This matter affects the wellbeing of large numbers of our constituents. Families will be blighted and faith in fairness will be ruined. The Minister—an honourable gentleman, a good Treasury Minister, a valued colleague and friend—needs to see the writing on the wall and take action. Woe betide those who do not. They will rue the day that they failed to listen to the voices that have been aired today.

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate Mr Baker on securing the debate. It is clear from what we have heard that the issue has caused much consternation and anguish for many people, so it is right that those concerns have been aired here.

As much as the next person, I believe that if tax is due, it should be collected. Without the ability to raise funds, our public services would grind to a halt. I am sure there is unanimous agreement about that. My concern, and that of many hon. Members, lies in the way the recovery of the 2019 loan charge has been handled. It raises questions about whether HMRC can say, hand on heart, that all those who are subject to it have had what I would call a fair hearing. I want to make it absolutely clear that if, following due process, the money is owed, it should be paid, but what I have heard from a constituent does not give me confidence that that will be the case.

My constituent, Mr Crook, was working as a geologist in the oil industry when the agreements that are being scrutinised were set up. His work has dried up and he is now unemployed. He tells me that he is not in a position to repay everything he owes—not that he has been told how much that is—and that because of the uncertainty and the failure of HMRC to engage with him, he is concerned about the risk of bankruptcy.

I have corresponded with Ministers and officials to ask someone to look into Mr Crook’s case but I have had nothing back but the standard response. With Mr Crook understandably anxious to resolve matters, he has contacted HMRC at the email address provided on 9 April, 8 May, 30 August, 31 August and 28 September, and by post on 2 July. His emails have had an automated response and he has had no response to his letter at all.

My hon. Friend is making a powerful argument on his constituent’s behalf. I have a constituent much like his who has been told that he may have to pay back more than £100,000 over the five years, which could cost him as much as £2,500 a month. Does my hon. Friend accept that even when people are still in work, if they are trying to provide for their families, those sorts of sums are simply unobtainable for most of our constituents and will lead to bankruptcy, whether that is what the Government intend or not?

There is a lack of reality and a lack of genuine engagement with the individuals affected. As I said, my constituent has not had a discussion of the sort that my hon. Friend refers to, and until he does, he is in no position to know whether he will be able to repay anything at all. Will there be genuine discussions before the loan charges become due? Is the Minister confident that the Department has sufficient staff and resources to deal with all the inquiries that we have heard about?

My constituent tells me that although he submitted his tax returns each year when he was working they were never queried, and because of that HMRC has at the very least implicitly, if not explicitly, accepted that the moneys he received as a loan were indeed just that. He is concerned by the retrospective nature and long reach of the loan charge, and states:

“We really are normal people, who operated within the law at the time, itemising everything on our tax returns, paying benefits in kind tax on the loans and operating under a registered scheme with a reference number lodged with HMRC at the time.”

I contrast those words with what my hon. Friend Siobhain McDonagh said earlier about the string of multinational companies that are clearly paying less tax than they ought. When individuals are being driven to despair by the sort of hectoring we have heard about, it is perhaps right if they conclude that there seems to be one rule for the big corporations, and another rule for the man on the street. If individuals are made bankrupt we will all lose, but it looks as if we could end up in that situation by default because of a lack of resources and engagement by HMRC. Will the Minister look carefully at how the recovery operation is working so that we avoid that? Finally, I ask that HMRC acts with competence and compassion.

I appreciate being called in this debate, Mr Walker, and I thank Mr Baker for securing it.

In previous years, the SNP has raised concerns about the implementation of IR35 legislation, and during discussions on the Finance Bill I suggested a review into the way that it was being implemented. It was not necessarily that the legislation was a bad idea, but the way it was implemented did not work for people because they could not navigate the system appropriately. I raised that issue in 2016, just as my colleagues did previously.

I have been approached by many constituents about the loan charge. Some were recommended to join these schemes by the companies they worked for, which wanted them to move on and become contractors. One person told me that a presentation was given in the company’s boardroom by another company running one of the schemes. Individuals were encouraged to go to that presentation and transfer into one of the schemes rather than being employees of the company. That is a real concern.

I am concerned about the way that this measure is being implemented. I have a constituent who filled in his details before 30 September, as he was requested to do, but has not yet received a settlement figure from HMRC. Another constituent in the same boat has been told that they will receive a settlement figure by 5 April next year, although the Treasury promised that those figures would arrive by 30 November this year. People are being told that the settlement figures will not be calculated until 5 April, but they have also been told that they will need a payment plan in place by then in order to be compliant. If that settlement figure is not calculated until April and the payment plan will be required immediately, people do not have enough time to make the decisions they need to make on any settlement figure.

Clarity about timelines would be hugely appreciated. This has been a moveable feast, and the Treasury and HMRC have regularly changed the dates and times by which people have been required to submit information. It is important to have clarity so that people know when they need to have a payment plan in place.

It is important that people pay the tax they owe. At least one of my constituents is disputing the calculation made by HMRC. They have not been given a breakdown of the calculation and cannot work out why HMRC has come to that figure. There needs to be transparency so that people understand why HMRC thinks they owe what it says they owe, and they can then make rational and reasonable decisions about payment plans.

I have been clear with any constituent who has approached me, and with HMRC, that we need a mutually beneficial payment arrangement. We cannot have people being made bankrupt as a result of these payments. The change from 12 months to a five-year period for repayments is welcome, but if someone is being asked to pay back hundreds of thousands of pounds when they are existing on jobseeker’s allowance, it is not possible to pay that money back over five years.

I am also concerned about individuals who are being asked to sell or move out of their family home and have it repossessed. That causes problems for local councils as well as for the family involved, and just passes the buck. If HMRC wants to recoup the money, it would be sensible to do that in a way that means people can pay it, rather than having to be made bankrupt. We need give and take by HMRC, as well as transparency and clarity about dates.

Does my hon. Friend agree that one of the biggest problems facing people in this position is the uncertainty of not knowing how they will cope with paying these large amounts back over a period of time, when no assistance or guidance has been provided as to how they might make those payments?

As I said, this has been an incredibly movable feast and HMRC keeps moving the goalposts. It is important to have clarity about the future timeline. Constituents need to understand what they will need to pay back, the timescale involved, and why they are being asked to pay back the amount requested.

There is no doubt that small business owners, contractors, and others who have used these schemes will be significantly affected by the charge next year. Many are not wealthy people. They did not intend to avoid tax, and until recently many were not aware that there was even an issue. In some cases, the schemes were presented by agencies or employers as part of a standard contract. Some people could lose their livelihoods; some could lose their homes. The schemes we are talking about are a form of tax avoidance, and it is right that tax owed is collected. Avoidance should not pay—that is the principle. However, those who will be negatively affected by these schemes deserve our empathy and understanding, and many of the stories we have heard confirm that some of those affected are vulnerable and became caught up in these schemes without initially comprehending what they were all about.

If what is being reported is correct, it is an absolute disgrace that hospital cleaners, locum doctors, nurses, council workers, social workers and other people who work hard for the public on low or moderate pay were recruited into these schemes by tax advisers and bogus umbrella companies. It is an absolute disgrace that the Government are determined just to take on those individuals, rather than those who facilitated this avoidance for profit—those who fully knew what they were doing, and did it anyway.

If the reports are right, in some cases nurses or other public servants were made redundant by public sector organisations, only to be hired immediately as contractors through agencies who then facilitated these tax avoidance schemes. What action have the Government taken against those agencies? Some might say that this was fraud, because the schemes were not a genuine way to reduce tax liability. I have some sympathy with that view, because the schemes seem to have harmed many “clients”, and in my head I cannot justify a professional tax expert setting up such a scheme and getting a nurse, a social worker, or someone else on a low or moderate wage involved in it. If it is not illegal for those tax experts to do that, it bally well should be.

Let me ask the Minister a direct question: if his Government maintain that these arrangements were illegal when entered into, why have they done nothing about the advisers who recommended them? Does he agree that when advisers promoted these schemes, they were promoting something illegal? The advisers get off scot-free while those who can ill afford it carry the can.

One of the employee benefit trust schemes we are talking about was created by Deloitte, which is one of the largest business services companies. It was put in place by Deutsche Bank, working with offshore entities in the Cayman Islands that were set up for this specific purpose. That was confirmed by the Supreme Court in 2016 following court rulings in 2014 and earlier. Two years on, however, there has been no investigation or prosecution, and no penalty for mass marketing unlawful schemes. No accountancy firm has been disciplined by the professional body, the Institute of Chartered Accountants in England and Wales, and the Government did not even attempt to recover the legal costs spent fighting those cases. Why?

The Government’s priorities seem clear: they will not go after the enablers. We appear to be talking about advisers and employers who have exploited public service workers—workers who will see no benefit themselves—and at the same time directly reduced the tax that pays for those self-same public services. It is simply wrong, and it goes to show yet again how absurd, short-termist and unfair the outsourcing and privatisation policies have been.

We believe that clemency should be considered when businesses or people are at risk. As hon. Friends and other hon. Members have said today, if the loan charge causes businesses to go under next year, that will not help the Treasury recoup losses in the longer term. As Kirsty Blackman said, it will cost the public sector more if we have to evict people from their homes and rehouse them. I hope the Minister will tell us what the Government will do to treat everyone involved with compassion and care, particularly those who unintentionally fell foul of the schemes, including vulnerable people and those on low incomes. Campaigners say that the exact opposite is happening: people are being treated with little understanding or compassion by HMRC.

The impending deadline of April next year and the potentially severe consequences for anyone on a low wage who does not meet that deadline justify concerted outreach to those who have loan balances outstanding. We cannot let vulnerable people who have been exploited end up with massive tax debts hanging over their heads for many years to come. If we see bankruptcies, failing businesses, repossessions and even suicide, that will be because this Government have not done the outreach needed and not invested in adequate training. It will also be because the context for the charge is a cut to the HMRC workforce of 17% since 2010, even while they are rightly being asked to do more to tackle such complex problems.

We should not let the Government’s approach to loan schemes distract us from their absolute failure to deal with large-scale tax avoidance. Loan schemes are far from the only form that avoidance has taken in recent years, and are small in comparison with the tax avoidance methods used by the ultra-rich. Labour supports strong measures against tax avoidance. We want the Government to go much further. We want them to go after the enablers, those who knew that the schemes were tax avoidance and illegal, but who peddled them anyway. Thank you.

Thank you, Mr Walker. It is a pleasure to serve under your chairmanship.

I congratulate my hon. Friend Mr Baker on bringing this debate to the Chamber. I acknowledge the 12 speeches from colleagues across the House, who raised some very important issues on behalf of their constituents. Only last Friday, some of my constituents too came to raise the matter with me.

In the course of my response, I hope to address the significant issues discussed: time to pay; retrospection; whether HMRC is going after the promoters; what my hon. Friend said about the disclosure of tax avoidance schemes; the numbers involved; and the difference between retroactive and retrospective. I will also give some detail on the sums of money that we anticipate will be raised through the measure.

The responsibility of Government is to assess critically the impact of any tax reform, and to ensure that it is structured and implemented in the best possible way.

The Government say not only that the loan charge is designed to treat loans as income but that if the loans—now income—are written off, they will be subject to inheritance tax because the loan will not be repaid. Numerous court and tribunal findings agree that the loans were loans, not income, yet the Government press ahead regardless. Does the Minister agree that that is completely wrong and unfair?

I acknowledge the early-day motion tabled by Members. It has attracted 103 signatures, and I also acknowledge the concern throughout the House on this matter. The concerns expressed are for people who have used a disguised remuneration scheme, who expect to have outstanding loans in April 2019, and who will be subject to the charge. I recognise that the Government need to be clear about why we legislated for this charge, which received Royal Assent following a full debate during the Finance Bill process in 2016-17. I will outline the steps that the Government have taken to help those individuals who may be affected.

The Government believe that it is not fair to ordinary taxpayers, who pay their tax on time and in full, to allow people who have used tax avoidance schemes to get away with it. Disguised remuneration tax avoidance schemes are contrived arrangements that use loans, often paid through offshore trusts, to avoid paying income tax and national insurance contributions. The schemes may have involved provision of a loan with no intention whatever to repay it. I spoke to the Financial Secretary this morning, while preparing for the debate, and he said, “Earnings are earnings, and a loan is a loan”, and that is what the issue boils down to.

I understand the Minister’s point, but before he progresses with his speech, will he clarify whether he accepts what many Members have asked this afternoon, that those who undertook the scheme did so in good faith, and therefore that the people ultimately in trouble for this system are those who perpetrated it, not those who signed up to it?

I am happy to concede that for the 50,000 indivi-duals affected, there are obviously responsibilities for those who promoted this. It is absolutely the case that HMRC is pursuing those individuals. They often promoted the scheme to large numbers of individuals. Five cases are before the courts—that seems a small number, but each one covers a large number of individuals—and there has been a judgment in one, with the other four cases still moving through the courts. It is not right to say that HMRC is not engaged with those who promoted the scheme.

Others did, I appreciate that—that is fair. I take on board the sentiment of the Chamber with respect to ensuring that HMRC is engaged with those who promoted the scheme, as well as the other individuals.

I will be gentle, because the Minister knows, as I do, the peope who are really responsible in our respective parties for this particular piece of legislation. I would, however, be grateful if he takes on the responsibility to ensure that we are written to about the actions that the Government take against the enablers.

I am very happy to engage with HMRC to get a letter setting out the action taken. I suspect that there might be some constraints on revealing details of individual live cases, but where data are available, I will make them available to hon. Members.

Will the Minister confirm, either now or in any such letter, the Treasury’s objectives in pursuing those companies? Is it to take retrospective action against them to try to recover the great volume of money they received from selling those schemes?

HMRC’s objective will be to secure the money owed, as per the rules of the tax system. HMRC has enormous power to levy charges of up to £1 million on those individuals who are not complying.

The schemes may have involved provision of a loan with no intention to repay it. The recipients of such payments enjoyed them no differently from the way any of us use our normal income. As such, in the eyes of HMRC, the payments have always been taxable.

I have acknowledged the comments of colleagues who said that the charge on disguised remuneration loans will apply to loans that were made as far back as 1999. It is fair to say that the schemes were never permitted. They were defective, going back to then.

We now learn from the Minister that HMRC knew that the schemes were inappropriate from the outset. So is he saying that HMRC is not malevolent but indiligent, inefficient and ineffective? If HMRC knew that, and the schemes were mainstream for 20 years, why is it acting only now?

I thank my right hon. Friend for his point. Every scheme will be taken individually. They were not one single scheme that was developed. It is for HMRC to open cases on the disguised schemes, which it has done—going back many years on some of them—and it will take action as appropriate. A concern has been raised in the debate about not determining an outcome, and my hon. Friend the Member for Wycombe raised the concern about the implication that, when a tax avoidance scheme has been disclosed, that is somehow a verification or an endorsement of it. That is a misleading perception that has been left, and something for which HMRC should be accountable.

Forgive me. I will not intervene more than twice on the Minister, because I know he wants to make progress. I have always regarded HMRC as an efficient organisation that goes about its business properly. Is this not about the Government? The Government took a view about all this and I suspect that, although it may be true that HMRC is implementing Government policy, this is really about the Government changing their mind. That is what we are asking for.

The Government that my right hon. Friend was part of and, I believe, a Minister in at the time the legislation was passed. [Interruption.] Let me make some progress.

Although the measure subjects the loans to a tax charge, that 2019 charge applies only to current loan balances and does not arise until April 2019. Recipients of loans can still repay outstanding balances in full or settle with HMRC. The legislation is not retrospective because it sets out Parliament’s intention: payments subject to the loan charge should always have been, and will be, subject to tax. The announcement in the 2016 spring Budget by the former Member for Tatton provided scheme users with a three-year period in which to repay disguised remuneration loans or agree a settlement with HMRC to avoid the charge.

Nearly 50% of those who are liable for the loan charge have not had any communication with HMRC since June 2016. Some of them are my constituents. Does the Minister agree that HMRC must accelerate its communications, to take that cloud of uncertainty away from those who are affected?

I thank my hon. Friend for that point. There have been 24,000 contacts with HMRC. The number of telephone calls has increased from 2,000 to 4,000 a week and extra resources have been made available by HMRC, but I am happy to take up any individual cases that my hon. Friend may wish to bring to me.

In the view of the Government and of HMRC, the payments were always taxable as income, and the new legislation reiterates and formalises that stance.

The Minister is being very generous with his time. That final point reiterates the issue here. I have constituents who are employed in the construction industry and when they were taken on by the agencies—the umbrella companies—through which they had to go to access the work, they simply were not aware of their liabilities and were not made aware of them. This is a natural justice issue. The policy is harming people who are not particularly well paid, have done everything right and are being unfairly punished.

Let me make some more progress otherwise, despite the time I have, I will not get to the end of my speech and I want to address the points raised.

Anyone who has been involved in legal action will be well aware that it can be protracted and expensive for all concerned. Agreeing a settlement with HMRC allows taxpayers to move on, and out of avoidance for good. In most cases, any users of schemes will be better off approaching HMRC and agreeing a settlement rather than waiting for the charge next April, and HMRC is encouraging anyone worried about being able to pay to get in touch as soon as possible.

On the point about taxpayers wanting to move on, several of my constituents have requested settlement sums from HMRC but have not received a response, notwithstanding the passage of several months. That is prolonging their uncertainty and anxiety. Will the Minister take steps to ensure that HMRC responds to those requests for settlement as rapidly as possible?

I certainly will. I took the precaution of speaking to the Financial Secretary again this morning, and I would like to clarify that, with the time-to-pay arrangements, the five-year period will automatically be put in place for those with incomes of less than £50,000. For those with larger incomes, there is an opportunity for dialogue with HMRC. With respect to individuals who have not had that settlement made known, I will be happy, as we all will as constituency MPs, to take those cases up with HMRC.

HMRC is helping thousands of scheme users to get out of avoidance for good.

Just one moment. It will consider all personal circumstances to agree a manageable and sustainable payment plan wherever possible, and it has recently announced simplified payment terms for individuals looking to settle their tax affairs before 2019.

I want to address another issue of the debate. Those who oppose the legislation have made claims that the loan charge will bankrupt public sector workers, including teachers, nurses and social workers. It is my understanding that 1,500, or 3%, of individuals will be involved in the health and education sectors but that most of the scheme users worked in professional services. The average salary of the scheme users was £66,000, which is considerably higher than the average annual wage.

I obviously cannot respond on an individual’s situation, but what I will say is that disguised remuneration schemes are complex and contrived and, as my hon. Friend the Member for Wycombe said, fail the “too good to be true” test.

Although the Financial Secretary and I have tremendous sympathy for those facing large tax bills, it is unfair to let people get away with not paying the tax they owe. There is support for people who have used the schemes and now find themselves in difficult situations, which require those affected to approach HMRC and bring the matter to a close. I will now allow my hon. Friend the Member for Wycombe to make some concluding remarks.

I am grateful to everyone who has come to the debate and participated. The debate has overwhelmingly avoided straying into the partisan, for which I am grateful. I listened carefully to all the speeches and I do not think anyone stood up and sided with those who think it is legitimate to be paid through loans that have been made with no intention of repayment—no one stood on that side of the argument. What we have seen is how people have been drawn, or even driven, into such schemes, and that is the heart of the injustice.

We have heard stories of human suffering that would melt any heart, which brings us on to the heart of the matter—the rule of law. Once again, my hon. Friend the Minister has earned my admiration, because he seems to get all the Treasury’s toughest gigs. I sometimes wonder whether he should have been promoted to the Department for Exiting the European Union for a little break.

He will have heard the response of people present when he explained that the measure is not retrospective, and I really hope that the Treasury goes away, looks at the measure again and eliminates retrospection. When people have acted in good faith under advice and end up subject to injustice, we must uphold the principle of the rule of law. Some might then say that they had got away with it, but sometimes we have to say, “While we don’t stand on their side and we accept that it was not Parliament’s intent, we respect that there is a price to be paid for upholding the rule of law so that in the end we can preserve human liberty and justice”.